Tuesday, September 24, 2019 Stamford, CT USA —To win assets from retail investors in today’s crowded market, asset managers must offer more than just strong investment performance.
Banks, financial advisors, insurers, and other companies that distribute retail investment funds say managers on their platforms need to deliver something that makes them stand out from the crowd. Their ability to deliver that extra something sets the 2019 Greenwich Quality Leaders in Intermediary Fund Distribution apart from their asset management rivals.
Innovation, Strong Performance and/or Low Fees
Gatekeepers for independent fund distributors in Asia are clear about what they want from asset managers: innovation such as value-added services in reporting and analytics, and new technology offerings like digital solutions enabling investor self-service.
Asian platforms’ strong emphasis on innovation stands in stark contrast to preferences in Europe. In Europe, the two most important selection factors for fund providers are performance and fees. For European gatekeepers and their retail investors alike, it’s becoming an increasingly binary choice: Managers either deliver strong performance, or they charge low fees. All other factors are of secondary importance.
ETFs Capture a Growing Share and ESG is a Requirement
The strong focus on fees by European gatekeepers and retail investors is fueling the growth of ETFs. In equities, ETFs make up more than a quarter of platform assets, up from 17% in 2018. In fixed income, ETFs have doubled as a share of funds under distribution over the past three years to 22%.
Growth has been equally as strong on retail distribution platforms in Asia, where ETF allocations have doubled in equities and tripled in fixed income in just the last three years. “In both markets, this move into ETFs is being facilitated by a strong education push from asset managers and fund platforms, and by demand from high-net-worth investors looking to lower costs by switching from active to passive management strategies,” said Greenwich Associates Managing Director Markus Ohlig.
Asset managers hoping to sell funds on retail distribution platforms should be working now to incorporate environmental, social and governance (ESG) factors into their investment process. “In Asia, about a quarter of the gatekeepers we spoke with say their platforms will only accept funds from providers with a clearly articulated approach to ESG—a share that’s expected to top 50% in the next five years,” said Greenwich Associates Principal Parijat Banerjee.
In Europe, fully one third of platforms require a clearly articulated ESG policy. Three-quarters of fund distributors expect to impose such a requirement by 2024, including half of financial advisors, 82% of private banks and 100% of insurance companies in the study.
2019 Greenwich Quality Leaders in Asia and Europe
While the 2019 Greenwich Quality Leaders in Intermediary Distribution in Asia and Europe differ in terms of product focus, regional strategy and geographic footprint, they share several important traits. All have top quality relationship management functions and deliver top tier service to fund distributors and end investors.
All three Greenwich Quality Leaders in Asia have built out credible multi-asset capabilities, with PIMCO also dominating the region in fixed income. J.P. Morgan Asset Management gets strong marks in Asia for digital capabilities, while AllianceBernstein stands out for its innovation in both products and service. Allianz Global Investors takes the lead in Europe as the 2019 Greenwich Quality Leader for Overall European Intermediary Distribution.